Gold & Silver Daily

Ed's Critical Reads

Oct 23, 2014

Kyle Bass warns Q.E. end will shake up markets

Central banks meeting next week will expose a huge divergence in monetary policy between several major economies, putting the macro environment in focus and weighing on foreign exchange, hedge fund manager Kyle Bass said Wednesday.

The founder of the $1.7 billion hedge fund Hayman Capital thinks the Fed likely will taper its bond-buying stimulus to zero next week. The Bank of Japan, however, likely will announce it will do whatever it takes to prevent the world's third-largest economy from heading into a major crisis.

"They still run 10 percent fiscal deficits. We think they're going to run a current account deficit of 2 to 4 percent next year and Japan is going to have to buy more bonds and the U.S. is going to buy no more," Bass said on "Squawk on the Street." "And so when the training wheels come off the market in central bank land, macro becomes functionally much more relevant."

There are three CNBC video clip with Kyle that run concurrently.  In total, all three run for 7 minutes.  They showed up on their website around 9 a.m. EDT on Wednesday morning.  They're worth watching.  I thank reader David Ball for today's first story.

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McDonald's Franchisees Say the Company is Bankrupting Them

McDonald's franchisees are furious that the company's aggressive promotions and costly restaurant upgrades are squeezing their profits, according to a new survey.

"Growth for McDonald's is over," one franchisee wrote in response to the survey by the financial services firm Janney Capital Markets.

"I am just hoping to be flat," another franchisee said. "[The] customer has lost faith in the brand."

"We are leaderless," said a third. A fourth franchisee complained, "They are being successful in bankrupting us."

This very interesting news item appeared on the businessinsider.com Internet site at 4:48 p.m EDT on Monday---and it's courtesy of reader Brad Robertson.

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Manufacturing moving from China to U.S. - survey

Large manufacturers are increasingly moving production back to the United States from China, according to a new report by The Boston Consulting Group released Thursday.

In the third annual survey of US-based senior executives at manufacturing companies with annual sales of at least $1 billion, the number of respondents who said their companies were currently reshoring to the U.S. from China increased 20 percent from a year ago.

Given the fact that China's wage costs are expected to grow, do you expect your company will move manufacturing to the United States?" the August survey asked executives at an unspecified number of companies that currently manufacture in China.

The executives who said "Yes, we are already actively doing this" rose to roughly 16 percent in the "Made in America, Again" survey in August from 13 percent a year earlier and seven percent in the first survey in the series, in February 2012.

This AFP news item appeared on the france24.com Internet site at 9:05 a.m. Europe time this morning---and I thank South African reader B.V. for sliding it into my in-box shortly before I filed today's column.

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Fed spotted JPMorgan 'Whale' risks years before scandal: inspector

The Federal Reserve's New York branch knew about risks JPMorgan Chase & Co was taking with its massive "London Whale" derivatives bets four years before they imploded, but it failed to act properly to head them off, the U.S. central bank's inspector general said.

The Fed's Office of Inspector General said on Tuesday one of the key flaws it uncovered in its probe of the 2008 transaction at the Wall Street bank was the New York Fed's over-reliance on certain personnel who left the supervisory team in 2011. That created a "significant loss of institutional knowledge" within the team assigned to inspect JPMorgan, the report said.

In what amounts to another recent black eye for the New York Fed's bank supervision unit, the report also noted that competing supervisory priorities and limited resources contributed to a failure to conduct key follow-up examinations.

This Reuters article, co-filed from New York and Washington, put in an appearance on their Internet site at 1:59 p.m. EDT on Tuesday afternoon---and it's a story I found in yesterday's edition of the King Report.

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All the Markets Need is $200 Billion a Quarter From the Central Bankers

The central-bank put lives on.

Policy makers deny its existence, yet investors still reckon that whenever stocks and other risk assets take a tumble, the authorities will be there with calming words or economic stimulus to ensure the losses are limited.

A put option gives investors the right to sell their asset at a set price so the theory goes that central banks will ultimately provide a floor for falling asset markets to ensure they don’t take economies down with them.

Last week as markets swooned again, it was St. Louis Federal Reserve President James Bullard and Bank of England Chief Economist Andrew Haldane who did the trick. Bullard said the Fed should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, while Haldane said he’s less likely to vote for a U.K. rate increase than three months ago.

Just a softer way of saying the President's Working Group on Financial Markets, now shortened to the Plunge Protection Team.  This Bloomberg offering, filed from London, showed up on their Internet site at 5:18 a.m. Mountain Daylight Time on Tuesday morning---and it's the second item in a row that I plucked from yesterday's edition of the King Report.

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Currency wars are back: 'Export your deflation to someone else'

Brazil Finance Minister Guido Mantega popularized the term “currency war” in 2010 to describe policies employed at the time by major central banks to boost the competitiveness of their economies through weaker currencies. Now, many see lower exchange rates as a way to avoid crippling deflation.

Weak price growth is stifling economies from the euro region to Israel and Japan. Eight of the 10 currencies with the biggest forecasted declines through 2015 are from nations that are either in deflation or pursuing policies that weaken their exchange rates, data compiled by Bloomberg show.

“This beggar-thy-neighbor policy is not about rebalancing, not about growth,” David Bloom, the global head of currency strategy at London-based HSBC Holdings Plc, which does business in 74 countries and territories, said in an Oct. 17 interview. “This is about deflation, exporting your deflationary problems to someone else.”

This Bloomberg news item, filed from London, appeared on their Internet site at 8:24 a.m. Denver time yesterday morning.  It---and the headline---were something I found at the gata.org Internet site.

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Why it’s now too late for Germany to rescue the eurozone alone

The eurozone is yet again in a nasty state.

As it suffers from low growth and low inflation, the two combine to make a nasty cocktail. Without much of either, unemployment remains stuck at an eye-watering high 11.5pc, and government debt burdens are likely to feel increasingly heavy.

The European Central Bank (ECB) has announced a variety of acronyms - CBPP3, TLTROs, and an ABS purchase scheme - all stimulus measures designed to combat the euro area’s low inflation crisis.

Yet so far, they’ve been insufficient to raise expectations of future inflation, implying that the firepower just isn’t strong enough. Economists are hoping that the ECB will deploy outright quantitative easing, and start buying up the sovereign bonds of eurozone governments.

This article appeared on the telegraph.co.uk Internet site at 2:14 p.m. BST on their Wednesday afternoon---and it's courtesy of South African reader B.V.

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France moves to make presidents impeachable

The French parliament voted Tuesday in favour of a draft law that could, for the first time, make it possible to remove the country’s president from office through a US-style impeachment.

The bill, already passed by France’s lower house, was approved by the Senate by 324 votes to 18.

It will now go to France’s Constitutional Council, which must decide if the bill complies with the French constitution, before becoming law.

If approved, the law would represent a radical change to the legal status of the French head of state – who has so far enjoyed greater legal protection than almost any other Western leader.

This news item was posted on the france24.com Internet site yesterday---and it's the second offering in a row from reader B.V.

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Christophe de Margerie: Total’s mustachioed maverick

Asked in 2010 if oil companies were right to make deals with the world’s despots and dictators, Christophe de Margerie, the boss of Total who died in a plane crash in Russia Monday night, gave a typically unequivocal answer: “bloody right.”

It was a reply that summed up a man unapologetic about doing whatever was necessary to keep the oil and profits flowing, no matter the opinion of the public, politicians or regulators.

De Margerie’s bushy, walrus-like facial hair earned him the nickname “Big Moustache”, but in his younger years he went by a different sobriquet – “Mr Middle East” – heading Total’s operations in that area from 1995.

It was a job that saw him scour for oil in some of the world’s most politically volatile places and made him a natural choice to head the French oil giant’s exploration and production department when the role became vacant in 2002.

This very interesting but longish commentary/obituary appeared on the france24.com Internet site on Tuesday Europe time---and it's the fourth article of the day from reader B.V.

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Ukraine's multi-billion dollar gas debt: Who pays?

Ukraine plans to buy $770 million worth of gas (2 billion cubic meters) from Russia this winter to keep the heat on. The question is: who is going to pay the bill?

All three parties, Russia, the E.U., and Ukraine met in Brussels on Tuesday and confirmed Kiev will pay $385 per 1,000 cubic meters of Russian supplied gas through the end of March. Before Ukraine can start purchasing gas, they need to pay off $1.45 billion in debt.

“There’s one obstacle: Ukraine failed to pay for Russian-supplied gas for seven months,” Oettinger said Tuesday. It will be difficult for Ukraine to find a benefactor, since, as Oettinger pointed out, its credit history is less than stellar. The economy is in ruin and may already need extra IMF money to stay afloat.

This Russia Today article showed up on their website at 2:53 p.m. Moscow time on their Internet site yesterday---and I thank Roy Stephens for sending it our way.  Reader Jim Skinner sent a story from the fortune.com Internet site on this issue.  It's headlined "Russia calls Europe's bluff on Ukraine gas deal."

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Russia says Ukraine should find money to pay for gas within a week

Ukraine should be able to find ways of paying for Russian gas supplies within a week, Russian Energy Minister Alexander Novak said on Wednesday, suggesting a standoff would end once Moscow received financial guarantees from Kiev.

The latest round of gas talks between Moscow and Kiev ended late on Tuesday in Brussels with no agreement in a dispute that prompted Russia to cut off gas supplies to its neighbor in mid-June, potentially hurting flows west to the European Union.

But while Novak said he was optimistic for new talks on Oct. 29, Ukrainian Prime Minister Arseny Yatseniuk said he was skeptical about building ties with Russia, underlining how efforts to reach a deal are hampered by a wider political conflict between the two countries.

Another conflicting story on Ukraine's gas issue.  This Reuters article, filed from Moscow, was posted on the their website at 7:14 a.m. EDT on Wednesday---and it's the second offering of the day from reader Jim Skinner.

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Russia Loses Oil Ally in de Margerie after Moscow Crash

Christophe de Margerie’s last act as chief executive officer of Total SA left no room for doubt about his feelings toward Vladimir Putin’s Russia.

In a Moscow speech hours before the plane crash that took his life two days ago, de Margerie said U.S. and European Union sanctions on the country were “unfair and unproductive,” and that he opposed efforts to render it “isolated from the major global economic and political process.”

Appearing before a receptive audience that included Prime Minister Dmitry Medvedev and a host of Russian executives, he cited his work as co-chair of a Franco-Russian business body alongside Gennady Timchenko -- a commodities billionaire who was one of the first targets of U.S. sanctions.

De Margerie’s death removes from the scene a businessman who rarely shied away from geopolitical debates and became one of Russia’s most outspoken allies in its efforts to avoid economic quarantine, willing to say what others only dared think. Although European corporate giants from Siemens AG to Renault SA have built close relationships with Russia, most business leaders have preferred to keep their lobbying private to avoid offending governments committed to punishing Putin.

This very interesting Bloomberg article appeared on their website at 6:24 a.m. MDT yesterday---and I thank reader M.A. for sending it.

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Good fundamentals make ruble ‘stable’ currency - Russian Central Bank

Russia’s currency has taken a significant 20 percent plunge this year against the dollar and euro, but analysts are confident that Russia’s sturdy stash of foreign reserves and miniscule external debt make the ruble one of the ‘most stable’ currencies.

Russia’s vast gold and foreign currency reserves will help weather the ruble’s rough patch. At more than $450 billion, they are the third largest reserves in the world.

"We believe that the fundamental factors that determine the value of our currency were unchanged. Fundamentally the balance of our budget, the absence of significant external debt of our state. Precisely because of this ruble is one of the most stable currencies," Deputy Chairman of the Bank of Russia, Mikhail Sukhov, told TASS Wednesday.

The Central Bank has already spent more than $10 billion in October to stymie the ruble’s fall, and $50 billion since the beginning of the year. However, the bank has signaled it won’t continue to prop up the ruble with billions more.

This must read article appeared on the Russia Today website at 4:16 p.m. Moscow time on their Tuesday afternoon---and it's the final offering of the day from Roy Stephens.

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U.S. Embassy in Baghdad Shelled With Rockets: Reports

The U.S. Embassy in Iraq located in central Baghdad has been shelled with rockets, Al-Mustakillah news agency reported Wednesday citing a security source.

"On Tuesday night the US Embassy was hit with three rockets. They were fired from a park area in the Dora district [in southern Baghdad]," the agency's source said.

Earlier on Tuesday, Al-Sumaria TV channel reported a mortar shelling of the so-called "green zone" in the center of the capital, housing government buildings and foreign missions. Security forces surrounded the area to repel a potential attack.

The above three paragraphs are all there is to this brief story that appeared on the RIA Novosti website yesterday at 2:02  p.m. Moscow time.  It's the second offering of the day from reader M.A.

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Big nations snub Beijing bank launch after U.S. lobbying

China will officially launch a new $50 billion Asia Infrastructure Investment Bank on Friday as it steps up its challenge to global financial institutions like the World Bank that it feels are dominated by America and its allies.

But only 20 mostly small economies, many of them effectively client states of China, will become founding members of the bank at Friday's ceremony in Beijing after Washington lobbied furiously to stop other countries from signing up.

When it first unveiled its plan to establish the bank last year, Beijing extended a broad invitation and several European states, as well as Australia, Indonesia, and South Korea initially showed interest.

But thanks to pressure from the US -- conveyed by US diplomats in Beijing, Washington, and other capitals -- none of these countries will join the bank at this stage, although some are hoping to be involved later.

This Financial Times article, which is worth reading, appeared on their website yesterday---and it was posted in the clear in this GATA release.

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Nelson Bunker Hunt, 88, Oil Tycoon With a Texas-Size Presence, Dies

Nelson Bunker Hunt, the down-home Texas oil tycoon who owned a thousand race horses, drove an old Cadillac and once tried to corner the world’s silver market only to lose most of his fortune when the price collapsed, died on Tuesday in Dallas. He was 88.

His death, at an assisted living center, followed a long period of treatment for cancer and dementia, The Dallas Morning News reported.

“A billion dollars ain’t what it used to be,” he said in 1980 after silver stakes he had amassed with two brothers, Herbert and Lamar, fell to $10.80 from $50.35 an ounce. In barely two months, their holdings and contracts for purchases — corralling a third to half the world’s deliverable silver — had plunged from a $7 billion value in January to a $1.7 billion loss in March.

With the Hunts unable to cover enormous margin calls, the debacle endangered financial markets and brokerage houses, forcing federal regulators and the nation’s banks to step in with a $1 billion line of credit, a bailout that saved the system from a stampede and the Hunts from a meltdown.

This very interesting fairy tale, at least considering what's mentioned in the above four paragraphs, showed up on The New York Times website yesterday---and I thank Casey Research's BIG GOLD editor, Jeff Clark, for bringing it to my attention---and now to yours.  It's worth reading---but I hope its written with less bias than their reporting on the Ukraine/Russia situation.  For that reason you should read it with your b.s. meter on its most sensitive setting.

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Gold Is Undervalued – Ned Goodman

Ned Goodman, president and chief executive officer of Dundee Corp., believes gold is undervalued while equities are poised for a crash.

Speaking at a keynote luncheon at the Quebec Mining Exploration Xplor 2014 Convention in Montreal, Quebec, Goodman was blunt regarding gold prices and where they’re heading.

“We think gold is very undervalued at current gold prices,” Goodman said. “I think gold will hit $1,200, and when it does, be a buyer because I think that will be a good place to be.”

Touching on stock markets, Goodman didn’t pull any punches, calling it a Botox market where all deficiencies are simply covered and propped up to look healthy.

This story appeared on the kitco.com Internet site yesterday at 2:38 p.m. EDT yesterday---and it's the second contribution in a row from BIG GOLD editor Jeff Clark.

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Keith Barron, PhD: "I believe we’ve seen Peak Gold*"

On behalf of Matterhorn Asset Management, financial journalist Lars Schall talked with exploration geologist and mining entrepreneur Dr. Keith Barron.

Keith is a scientist and he explains in no uncertain terms what is going on in the mining industry, the false accounting relative to the cost of exploration, what happened when gold went up to 1,900, why gold versus USD simply must go to at least 5,000, why ‘gold above ground’, if anything, is overstated and why the Swiss Gold Initiative is indeed very important and not just for the Swiss People, as well as Keith Barron’s view on Silver.

Barron is a day late and a dollar short on this topic, as several other gold commentators/mining executives have already been down this road already this year.  This 47:17 minute interview was posted on the goldswitzerland.com Internet site yesterday---and I found it in a GATA release.

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Gold miners' outstanding forward sales jump 61 percent in Q2/14 - report

The volume of gold sold forward by mining companies jumped 61 percent in the second quarter after Russia's Polyus Gold added a major new hedge position, an industry report showed on Wednesday.

In their quarterly Global Hedge Book Analysis, released on Wednesday, Societe Generale and GFMS analysts at Thomson Reuters said they are predicting net hedging for the year of 40 tonnes, the most since 1999.

They forecast in July that gold producers would return to net hedging this year for the first time since 2011.

Volumes of hedging predicted for this year are still well below the levels seen in the late 1990s. Net producer hedging in 1999 reached 506 tonnes, according to GFMS data.

I'm sure you've heard the expression "much ado about nothing."  Well, despite the headline, that's what this Reuters story is.  However, it's worth your while as a trip down memory lane---and I thank Manitoba reader U.M. for sending it.

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Goldcorp chief says Asian buying will support price of gold

Demand from China and other parts of Asia will support the price of gold, the chief executive of one of its largest miners said, as the precious metal traded near its strongest level in six weeks.

Chuck Jeannes of Goldcorp said he saw "as much clarity in the market as there has ever been," with a "floor" created by strong demand whenever gold reached or fell below about $1,200 per ounce.

"The anecdotal evidence is that gold goes down and physical demand goes up," Mr. Jeannes said in an interview with the Financial Times. "A huge number of physical buyers in the world see gold as a bargain below $1,200."

You wonder how people such as him make it to positions of responsibility when they don't know anything about how their product is priced in the market---and run screaming when you attempt to explain it.  The above three paragraphs from a Financial Times article from yesterday, is all that's posted in the clear in this GATA release.  The rest is subscriber protected.

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Koos Jansen: It's official -- China's gold demand in 2013 was 2,199 tonnes

The China Gold Association has confirmed that China's gold off-take in 2013 reached 2,200, Bullion Star market analyst and GATA consultant Koos Jansen reported yesterday. That would constitute most of world gold mine production and the figure apparently does not include purchases by the People's Bank of China, which remain the most sensitive state secret.

"Why the Western media don't report on these numbers is a mystery," Jansen writes. "This data is not a secret. Yet the Chinese have been trying to hide it as much as possible---and it looks like either they're being helped by Western institutions, or these institutions are ignorant."

Of course there is still another explanation: that Western financial news organizations and the World Gold Council very much intend not to deal with this issue honestly, since doing so would impugn the whole Western financial system, built as it is on currency and commodity market rigging.

This must read commentary was posted on the Singapore website bullionstar.com on Tuesday---and this is another gold-related news item I found posted on the gata.org Internet site.

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This Dhanteras, gold coins are in, jewellery is out

Instead of the usual rush for jewellery, this Dhanteras sees a reversal of buyer's preferences, with more people opting for the traditional gold coin. We talk to some shopkeepers and buyers to understand this shift in choices

For many families in the city, a visit to their family jeweller today is as important as lighting lamps on Diwali. Jewellers too look forward to the festival of Dhanteras all year long, in the hope of making up for slow sales and the lean months. Unlike last year, this Dhanteras, the gold rate is lower compared to the last few months, which has given many store owners hope for a busy shopping day today.

But in an interesting twist, the low gold rate hasn't motivated people to increase their Dhanteras budget and buy jewellery instead of the traditional gold coins. Shoppers told DT why they would prefer to wait for the remaining festive days to pass before making any major ornamental purchases and why they will stick to the traditional coin purchases instead. Crowded shops, busy salespeople and `formality shoppers' make Dhanteras a bad day for investing in jewellery because like they say, buying an ornament is an experience that can be done once the hustle and bustle of Diwali is over.

This article showed up on the Times of India website at 11:41 a.m. IST on Tuesday---and I thank reader U.M. for finding it for us.

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Kolkata’s gold panners reap rewards at India festival time

As 40-year-old Mohammed Iqbal sifts through sludge in the back alleys of Kolkata’s jewellery market for gold dust, his weathered face brightens slightly at the recent uptick in work.

For generations, the city’s group of “newaras” — gold dust scavengers — have been scratching a living by panning for fine particles swept from the 2,000-odd jewellery workshops operating in the alleys.

Iqbal estimates he normally earns just 150 to 200 rupees ($2.40 to $3.20) a day from selling flecks of the precious metal that he painstakingly finds on the ground and in the drains of the grimy alleys.

But the onset of India’s raucous festival season, especially the biggest Hindu celebration of Diwali on Thursday, brings a relative bonanza for Iqbal, with his income more than doubling.

This extremely interesting AFP story appeared on the aquila-style.com Internet site early yesterday morning EDT---and I thank reader U.M. for sliding it into my in-box late yesterday evening MDT.  It's also her final contribution to today's column.

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Huge, honkin’ gold nugget hits the market in San Fransisco

Here we go again — what is believed to be the biggest gold nugget found in modern times in California’s historic Gold Country is going on sale Thursday in San Francisco.

This 6.07-pound whopper is being sold by Tiburon coin dealer Don Kagin, the same dealer who is selling the $10 million worth of gold coins that made such a stir this year after they were found in a couple’s backyard in the Sierra.

The “Butte Nugget,” so named because it was found by a gold hunter in the Butte County mountains, will be unveiled at the prestigious San Francisco Fall Antiques Show. The show opens Thursday at Fort Mason.

This very interesting news item put in an appearance on the sfgate.com Internet site at 10:33 a.m. Pacific Daylight Time yesterday---and my thanks go out to reader Carl Lindfors for digging it up for us.  And if you don't want to read the article, you should at least look at the picture.

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Oct 22, 2014

"Plunge Protection" Behind Market’s Sudden Recovery

Mysterious forces were trying their best, but they couldn’t keep the stock market from swooning [last] Wednesday.

They failed in the morning, despite massive purchases of stock index futures contracts. Within minutes of the market’s opening, the Dow Jones Industrial Average was down 350 points. Later in the day — after a lot of shocking ebb and flow — the Dow bottomed out with a decline of 460 points.

It was only in the last hour of trading that the market saviors managed to trim the Dow loss to just 173 points. And they succeeded only after Janet Yellen’s private, upbeat remarks about the economy were leaked.

Welcome to a new kind of stock market — one that the average investor should refuse to be invested in.

No surprises here, dear reader.  New York Post columnist John Crudele calls it the way it was.  This article appeared on their Internet site at 11:08 p.m. EDT on Monday evening---and I thank Howard Wiener for today's first story.  It's worth reading.

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Top Mortgage Firm Accused of Abuses

One of the nation's largest servicers of home loans may have denied struggling borrowers the chance to fix loan problems and avoid foreclosures, New York's financial regulator has alleged.

An investigation by the state's Department of Financial Services found that Ocwen Financial Corp. inappropriately backdated foreclosure warnings and letters that rejected mortgage loan modifications, making it nearly impossible for borrowers to appeal the company's decision.

Many borrowers who had fallen behind on loan payments also received warning letters months after the deadline for avoiding foreclosure had passed, department investigators found.

Potentially hundreds of thousands of backdated letters may have been sent to borrowers, likely causing them "significant harm," Benjamin Lawsky, New York's Superintendent of Financial Services, wrote in a letter to Ocwen released Tuesday.

This AP story showed up on their Web site at 5:11 p.m. EDT on Tuesday afternoon---and I thank Manitoba reader U.M. for her first offering of many in today's column.

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New Rules Adopted in Hopes of Spurring Home Loans

With the financial crisis and subprime mortgage bust receding further into history, the government is loosening some financial rules, hoping to inject more life into the country's still-recovering housing market.

Both banks and borrowers stand to benefit from the new rules unveiled Tuesday by six federal agencies. While banks will see relaxed guidelines for packaging and selling mortgage securities, fewer borrowers likely will need to make hefty down payments. The board of the Federal Deposit Insurance Corp. voted 4-1 Tuesday to adopt the new rules, and two other agencies approved them as well. The Federal Reserve has scheduled a vote for Wednesday, and two other agencies are expected to adopt the rules soon.

The regulators have dropped a key requirement: a 20% down payment from the borrower if a bank didn't hold at least 5% of the mortgage securities tied to those loans on its books. The long-delayed final rules include the less stringent condition that borrowers not carry excessive debt relative to their income.

Borrow and spend till you puke, but these changes are still a year away at least.  This AP story was picked up by the news.yahoo.com Internet site mid afternoon EDT---and it's courtesy of West Virgina reader Elliot Simon.

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Fed Emergency Update - Mike Maloney

"Ever since the 2008 crisis, I've been telling audiences that that crisis never ended, that the Federal Reserve is doing extreme emergency manoeuvres that show that there's still something very wrong with the world economy. Right now the entire economy really is on artificial life support." - Mike Maloney - October 20, 2014.

This 10:40-minute video commentary, complete with attached charts, was posted on the hiddensecretsofmoney.com Internet site on Tuesday sometime---and from what I've seen so far, it's worth watching.

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Dr. Dave Janda Interviews Your Humble Scribe

I spent about 25 minutes talking to the good doctor on a variety of issues on Sunday---and it was posted on the davejanda.com Internet site on the same day.

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Forex-Rigging Fines Against Banks Could Reach $41 Billion Worldwide, Citi Report Says

Probes into allegations that traders rigged foreign-exchange benchmarks could cost banks as much as $41 billion to settle, Citigroup Inc. analysts said.

Deutsche Bank is seen as probably the "most impacted" with a fine of as much as 5.1 billion euros ($6.5 billion), Citigroup analysts led by Kinner Lakhani said yesterday, estimating that the Frankfurt-based bank's settlements could reach 10% of its tangible book value, or its assets' worth.

Using similar calculations, Barclays could face as much as 3 billion pounds ($4.8 billion) in fines and UBS penalties of 4.3 billion Swiss francs ($4.6 billion), they wrote in a note first sent to clients on Oct. 3.

But nobody will go to jail, so the ethics don't change.  This Bloomberg article, filed from London, showed up on their Web site at 9:37 a.m. Denver time yesterday morning---and I found it in a GATA release.

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EU Fines JPMorgan, UBS, Credit Suisse for Taking Part in Cartels

JPMorgan, UBS and Credit Suisse were fined a total of 94 million euros ($120 million) by the European Commission for taking part in cartels in the financial sector.

The Commission handed JPMorgan a 61.7-million-euro fine for rigging the Swiss franc Libor benchmark interest rate between March 2008 and July 2009. It was also fined 10.5 million euros for participating in a cartel on Swiss franc interest rate derivatives.

UBS' penalty in the derivatives cartel came to 12.7 million euros and that of Credit Suisse was 9.2 million euros. Royal Bank of Scotland alerted the Commission about both cartels and escaped total fines of 115 million euros.

The penalties are the latest by the European Commission, which along with authorities around the world, has handed down billions of euros in fines against top banks for rate-rigging, breaking trade sanctions and other misbehavior.

But nobody is going to jail, so what's the point?  This Reuters story, filed from Brussels, was updated at 11:31 a.m. EDT yesterday, as reader Harry Grant sent it to me at 8:01 a.m. EDT yesterday.  Reader U.M. sent the Zero Hedge take on this headlined "Europe Demands Banks Hand Over Their Lunch Money Following Swiss Franc Libor Rigging".  The ZH folks are certainly less charitable than those over at Reuters.

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ECB to Spend €1 Trillion on Covered Bonds to Kick-Start Euro Economy

The European Central Bank (ECB) has embarked on a spending spree that could see it pump €1tn (£790bn) into the eurozone’s financial system.

After months of debate, on Monday the Frankfurt-based central bank began buying covered bonds in the next stage in its battle to revive the eurozone economy and keep deflation at bay.

ECB president Mario Draghi has made it clear the programme should return the ECB’s accumulated assets to 2012 levels, which means that by the time officials in Frankfurt have finished, its balance sheet could have risen from €2tn to €3tn. The aim of the move is to ease bank credit in the 18-member currency union after a difficult year that has seen a decline in business lending hamper recovery.

Covered bonds have an income stream of debt repayments backed by pools of home or commercial property loans; 90% of the global market is based in Europe, especially in Denmark, Germany, Spain, France and Sweden.

Mortgage-backed securities [MBS] Europe style.  I posted a story about this in Tuesday's column, but this offering from theguardian.com Web site at 5:17 p.m. BST on Monday is more comprehensive---and is something I borrowed from yesterday's edition of the King Report.

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No Russia-Ukraine Gas Deal at EU Talks; Moscow Queries Finances

Russia and Ukraine failed to reach an accord on gas supplies for the coming winter in EU-brokered talks on Tuesday but agreed to meet again in Brussels in a week in the hope of ironing out problems over Kiev's ability to pay.

After a day of talks widely expected to be the final word, European Energy Commissioner Guenther Oettinger told a news conference the three parties agreed the price Ukraine would pay Russia's Gazprom - $385 per thousand cubic meters - as long as it paid in advance for the deliveries.

But Russian Energy Minister Alexander Novak said Moscow was still seeking assurances on how Kiev, which earlier in the day asked the EU for a further 2 billion euros ($2.55 billion) in credit, would find the money to pay Moscow for its energy.

Dependent on Western aid, Ukraine is in a weak position in relation to its former Soviet master in Moscow, though Russia's reasons were unclear for wanting further assurances on finances, beyond an agreement to supply gas only for cash up front.

This Reuters news item, filed from Brussels, appeared on their Web site at 5:29 p.m. EDT on Tuesday afternoon---and I thank Jim Skinner for digging it up for us.  It's worth reading.

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Ukraine Used Cluster Bombs, Evidence Indicates

The Ukrainian Army appears to have fired cluster munitions on several occasions into the heart of Donetsk, unleashing a weapon banned in much of the world into a rebel-held city with a peacetime population of more than one million, according to physical evidence and interviews with witnesses and victims.

Sites where rockets fell in the city on Oct. 2 and Oct. 5 showed clear signs that cluster munitions had been fired from the direction of army-held territory, where misfired artillery rockets still containing cluster bomblets were found by villagers in farm fields.

The two attacks wounded at least six people and killed a Swiss employee of the International Red Cross based in Donetsk.

If confirmed, the use of cluster bombs by the pro-Western government could complicate efforts to reunite the country, as residents of the east have grown increasingly bitter over the Ukrainian Army’s tactics to oust pro-Russian rebels.

This article, filed from Donetsk, Ukraine, put in an appearance on the New York Times Web site on Monday sometime---and I thank Roy Stephens for sending it.

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Turkey to Let Iraqi Kurds Cross to Syria to Fight ISIS

Turkey will allow Iraqi Kurdish forces, known as peshmerga, to cross its border with Syria to help fight militants from the group called the Islamic State who have besieged the Syrian town of Kobani for more than a month, the Turkish foreign minister announced Monday.

The decision represents an important shift by the Turkish government, which has angered Kurdish leaders and frustrated Washington for weeks by refusing to allow fighters or weapons to cross its border in support of the Kurdish fighters defending the town. Speaking at a news conference in Ankara, the Turkish foreign minister, Mevlut Cavusoglu, said that his government was “helping the pesh merga cross over to Kobani.”

The announcement, along with an American decision to use military aircraft to drop ammunition and small arms to resupply Kobani, reflected escalating international pressure to push back Islamic State militants. As the United States-led coalition has increased its airstrikes as well as its coordination with the Kurdish fighters, who have provided targeting information, the militants have lost momentum after appearing close to overrunning the town.

This is another story from the New York Times Web site.  This one was posted there on Monday as well---and filed from Mursitpinar, Turkey---and it's also courtesy of Roy Stephens.

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Jim Rickards: China GDP Figures Are Bogus

Jim Rickards, chief global strategist at West Shore Funds, explains why he's not closely watching China's gross domestic product figures.

This 4:21-minute CNBC Squawk Box video clip appeared on their Web site at 8:15 p.m. EDT on Monday evening---and I thank Harold Jacobsen for bringing it to our attention.  It's worth your time if you have it.

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James G. Rickards: In the Year 2024

Writing for The Daily Reckoning, fund manager, author, and geopolitical strategist James G. Rickards imagines life in the year 2024 as being under the totalitarian control of a world central bank that has outlawed not only gold but also markets and money itself.

While Rickards' nightmare scenario is the perfectly logical consequence of the trend of central banking, we still have a few years to push the world toward a different future.

Rickards' essay is headlined In the Year 2024 and it's posted at The Daily Reckoning Web site---and it falls into the absolute must-read category.  [NOTE: I posted a story that critiqued Jim's article in yesterday's column.  It was headlined All the world’s gold to be confiscated and buried in Switzerland by 2020 argues Jim Rickards.  Now that I've read the original Rickards article, courtesy of reader Dan Lazicki, the title to the story is highly misleading, as is the author's commentary in spots, and I'm glad that I have the real deal for you today. Ed]

The first two paragraph of introduction are courtesy of GATA's Chris Powell---and I found the original Rickards essay posted on the gata.org Internet site yesterday.

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Citi Buys Deutsche Commodities Trading Book in Expansion Push

Citigroup Inc has bought Deutsche Bank AG's energy and metals book, a source familiar with the matter said, in the latest sign of expansion from the U.S. firm in commodities trading as rivals retrench.

Citi won Deutsche's oil, metals and power books this summer and autumn, the source said, after a bidding round that saw several Wall Street firms and trading houses chasing the opportunity to take on the positions of a once top-five commodities bank.

The deal will help Citi close the gap with top banking rivals in commodities trading, even as some exit the sector under increased regulatory scrutiny and lower margins.

Deutsche Bank, which once competed with Barclays and JPMorgan Chase & Co to challenge the long-running energy and metal franchises of Goldman Sachs and Morgan Stanley, announced it was largely exiting the sector late last year.

But, dear reader, Deutsche Bank is keeping its precious metal trading division.  This Reuters news item, filed from London, was posted on their Web site at 1:59 p.m. EDT on Monday afternoon---and I thank reader M.A. for another offering in today's column.

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First Swiss Gold Poll Shows Pro-Gold Side in Lead at 45%

GoldCore's Mark O'Byrne reported yesterday that the first opinion poll on Switzerland's gold repatriation referendum proposal shows 45% of respondents in favor and 39% opposed.

Chris Powell wrote the above---and I borrowed the headline from a GATA release as well, but the first person through the door with this story was reader U.M.

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UBS: Swiss Gold Exports At 7-Month High; Physical Demand Absorbing Investor Liquidations

Swiss trade data show gold exports hit a seven-month high in September and that the flow to Eastern from Western nations continues, says UBS. Swiss exports were 172.6 metric tonnes last month, the most since February.  Gold shipments to China jumped to 12 tonnes after averaging around three tonnes during the previous four months.

Shipments to Hong Kong increased to 24.7 tonnes, the most since April. Switzerland exported 58.5 tonnes to India last month, the largest shipment year to date and nearly twice the average monthly volume, UBS says.

Meanwhile, September gold imports into Switzerland were also high at 194.6 tonnes. Inflows from the U.K. jumped to 63.3 tonnes from 8.6 in August. “This suggests that a good portion of investor liquidations in September, that pushed the prices through the $1,200 psychological level, were absorbed by physical demand, with metal making its way from London vaults into Swiss refineries for refining/recasting and ultimately shipped to physical buyers in Asia,” UBS says.

This short commentary appeared on the kitco.com Internet site yesterday at 9:38 a.m. EDT---and you may have to scroll down a bit to get to it, but you've read most of it already.  It's another contribution from Manitoba reader U.M., for which I thank her.

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Dhanteras Sales Jump 20% over Lower Gold, Silver Prices

This Dhanteras saw jump in sales of jewellery in various parts of the country by at least 20% over last year following lower gold and silver prices in the retail markets. People are preferring lightweight jewellery and gold coins over traditional jewellery. In Ahmedabad the local jewellers expected the business to cross Rs 250-300 crore till Diwali (October 23).

Average gold prices that were around Rs 32,500 per 10 grams during last Diwali, were hovering around Rs 27,500 per 10 grams this year. Also, silver prices this year before Diwali were around Rs 39,000 per kg compared to around Rs 49,000 per kg last year during Diwali.

In Ahmedabad, upbeat over the lower prices of the yellow metal, as many as 60 jewellers under the Ahmedabad Jewellers' Association had launched the grand shopping festival "Swarna Utsav" which concludes on Diwali, with primary objective to recover the losses incurred by them in the past six months due to lack of business.

"During Dhanteras the sales of gold and silver has been significantly higher than last year. We expect sales to rise by 15-20% this year over last season," said Shantibhai Patel of the Ahmedabad Jewellers' Association. He said that this was due to lower price of the precious metals.

This gold-related news item appeared on the bullionbulletin.in Internet site at yesterday IST sometime---and it's another story from reader U.M.

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Chinese and Indian Gold Buyers Back in Market in a Big Way

What has been particularly strange about the gold market over the past two years is that the stronger the physical demand appearing for gold, the weaker the gold price has tended to get.

In the past few months, the gold price has fallen back from around $1,340 down at one time to $1,190 and now hovering back seemingly trying to breach $1,250 on the upside again, yet by all accounts demand in the two biggest consuming nations has been soaring and they are, between them, taking in virtually everything the world’s gold mines can produce.

The two countries are India and China. A mild relaxation of some of the import controls put on gold in the former saw gold imports rise to around 95 tonnes in September, while the weekly withdrawal statistics from the Shanghai Gold Exchange show that gold demand has latterly also picked up extremely well in China after a good start to the year, but then a marked downturn from March to August.

Indeed the latest weekly figures from the SGE could be seen as particularly strong given that the markets were closed for half the period due to China’s Golden Week holiday. While the total for the two weeks at around 68 tonnes may not seen spectacular, given that these purchases were actually made in only five days (September 29 and 30 and October 8, 9 and 10) due the long holiday market closure could suggest that Chinese demand is indeed soaring enormously.

Supply and demand no longer matter in all key commodities as the banks have hijacked the price discovery mechanisms on the Globex/Comex---and Lawrie knows that.  This commentary appeared on the mineweb.com Internet site yesterday---and it's worth skimming.

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Top Bullion Consumer China Works on First Gold Forwards, Options

The Shanghai Gold Exchange (SGE) is working on plans for China's first forwards and options in gold, sources say, potentially putting China ahead in the race to set an Asian pricing benchmark that might eventually rival the London gold fix.

China, which overtook India last year to become the world's biggest consumer of gold, bans trading in commodity options and forwards at present to limit speculation.

But Beijing is setting the stage for the launch of such derivatives as it opens up its markets, and gold could be among the first commodities on the list, although it remains unclear when trading might start.

The state-run SGE, at the forefront of China's efforts to dominate bullion pricing, opened an international bourse last month and foreign banks have shown strong interest in trading its yuan-denominated contracts. The exchange now wants to expand its product line to boost liquidity.

This longish Reuters article, co-filed from Singapore and Shanghai, appeared on their Web site at 2:50 a.m. IST on their Wednesday morning---and it's also courtesy of reader U.M.  It's also her last contribution to today's column, for which I thank her on your behalf.

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China Admits 40% of Magnetic Rare Earths Supply Is Illegal

World's dominant supplier of rare earth elements reveals a huge portion of supply used in magnets is illegally mined; much larger than initially anticipated

China – the world's leading producer of rare earth elements – has revealed that 40% of its supply used in high strength magnets is from illegally mined sources in the country.

The figure was revealed by rare earths expert Prof. Dudley Kingsnorth of Industrial Minerals Company of Australia (IMCOA) at a high level conference in Milan, the European Rare Earths Competency Network (ERECON).

Prof. Kingsnorth, who is the leading source of data in the rare earths market, was citing experts within China who are not only involved in the mining of the elements but also the government-led rare earths association.

I had a story about this in my Tuesday column, but this one is far more comprehensive.  It was posted on the mining.com Web site yesterday---and I thank reader M.A. for bringing it to my attention, and now to yours.

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Oct 21, 2014

Blood Red From Big Blue: Why IBM is Crashing---in Charts

Remember when three short months ago we revealed what was "the scariest chart in IBM's history", namely the one, showing IBM's total debt to equity ratio, which has exploded and surpassed Lehman highs, as the company scrambled to issue more and more debt and use it to repurchase more and more stock?

With this chart, incidentally, we also explained why IBM's ridiculous stock repurchasing strategy, which had seen $37.7 billion in stock buybacks since 2012, or more than the total debt issuance of $33.6 billion during the same period could not continue and why, inevitable, IBM would have a massively disappointing quarter.

Well, that quarter just hit, when moments ago in an early press release, IBM reported abysmal adjusted EPS of only $3.68, a huge miss to the $4.32 Wall Street expected, mostly a function of one simple thing: the buyback "strategy" finally hit a brick wall.

This very interesting Zero Hedge article appeared on their website at 7:42 a.m. EDT yesterday morning---and I thank reader Dan Lazicki for today's first story.

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Santelli & Schiff: "A Messy Exit is a Given... Ending Q.E. Will Plunge U.S. Into Severe Recession"

"Markets are slowly coming to grips with reality is not going to be as easy as everybody thought," Peter Schiff tells CNBC's Rick Santelli, noting the pick up in volatility across asset classes recently.

What The Fed clearly does not understand, Schiff blasts, is that "you cannot end quantitative easing without plunging the U.S. into a severe recession." Because of the Fed's extreme monetary policy and the mal-investment that flows from it, Schiff says, "The US economy is more screwed up now than it's ever been in history."

Most prophetically, we suspect, Santelli agrees that "a messy exit is a given," and Schiff believes they know that and that is why QE4 is coming simply "because it hasn't worked and they can't admit it's been a dismal failure."

This 2:40 minute CNBC video clip showed up on the Zero Hedge website yesterday at 5:49 p.m. EDT---and I thank Manitoba reader U.M. for her first contribution of the day.

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Fears That Pimco and Other Big Firms Could Be Unable to Unload Risky Bonds

When it comes to high-risk bonds, the asset management giant Pimco has pretty much cornered the global market.

Be it bonds issued by the automotive financier Ally Financial or the student loan financier SLM in the United States, or government bonds in Spain and Italy, Pimco holds a commanding position in these high-yielding securities.

But as Pimco’s portfolio managers double down on their bet that high-risk bonds will thrive in a world of low interest rates, a growing number of global regulators are warning that the positions being taken on by the big asset management firms pose a broad danger to the financial system.

These concerns were amplified this week as stock markets gyrated, the yields of high-risk corporate and European bonds spiked upward and, crucially, trading volumes evaporated.

This longish article showed up on The New York Times website last Thursday---and is worth reading, at least until your eyes begin to glaze over.  I found it in yesterday's edition of the King Report.

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FBI Director: If Apple and Google Won't Decrypt Phones, We'll Force Them To

Everyone is stoked that the latest versions of iOS and Android will (finally) encrypt all the information on your smartphone by default. Except, of course, the FBI: Today, its director spent an hour attacking the companies and the very idea of encryption, even suggesting that Congress should pass a law banning the practice of default encryption.

It's of course no secret that James Comey and the FBI hate the prospect of "going dark," the idea that law enforcement simply doesn't have the technical capability to track criminals (and the average person) because of all those goddamn apps, encryption, wi-fi network switching, and different carriers.

It's a problem that the FBI has been dealing with for too long (in Comey’s eyes, at least). Today, Comey went ballistic on Apple and Google's recent decision to make everything just a little more private.

This very interesting news item showed up on the motherboard.vice.com Internet site early afternoon last Thursday---and my thanks go out to Roy Stephens for his first offering of the day.

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Vote all you want. The secret government won’t change.

The voters who put Barack Obama in office expected some big changes. From the NSA’s warrantless wiretapping to Guantanamo Bay to the Patriot Act, candidate Obama was a defender of civil liberties and privacy, promising a dramatically different approach from his predecessor.

But six years into his administration, the Obama version of national security looks almost indistinguishable from the one he inherited. Guantanamo Bay remains open. The NSA has, if anything, become more aggressive in monitoring Americans. Drone strikes have escalated. Most recently it was reported that the same president who won a Nobel Prize in part for promoting nuclear disarmament is spending up to $1 trillion modernizing and revitalizing America’s nuclear weapons.

Why did the face in the Oval Office change but the policies remain the same? Critics tend to focus on Obama himself, a leader who perhaps has shifted with politics to take a harder line. But Tufts University political scientist Michael J. Glennon has a more pessimistic answer: Obama couldn’t have changed policies much even if he tried.

Though it’s a bedrock American principle that citizens can steer their own government by electing new officials, Glennon suggests that in practice, much of our government no longer works that way. In a new book, “National Security and Double Government,” he catalogs the ways that the defense and national security apparatus is effectively self-governing, with virtually no accountability, transparency, or checks and balances of any kind. He uses the term “double government”: There’s the one we elect, and then there’s the one behind it, steering huge swaths of policy almost unchecked. Elected officials end up serving as mere cover for the real decisions made by the bureaucracy.

No surprises here.  This author has just stumbled on the "powers that be" but doesn't give them a name.  G. Edward Griffin spells it out exactly in his book "The Creature From Jekyll Island"---or James Perloff's "The Shadows of Power: The Council on Foreign Relations and the American Decline".  This article appeared on the bostonglobe.com Internet site on Sunday---and I thank reader M.A. for sending it along.

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7 weeks of eruption: Stunning aerial video of Iceland’s Bardarbunga volcano

A breathtaking video filmed by an Icelandic helicopter pilot has documented the continuous eruption of the Bardarbunga volcano in northeast Iceland. Enormous fiery bubbles of lava and steam can be seen bursting from the ridges in the ground.

Helicopter pilot Gísli Gíslason captured the wondrous images while on several trips over the volcano – some of which were taken on Friday, and others a few days previously.

“Almost seven weeks have now passed since the Holuhraun lava eruption began. The eruption is continuing with few changes. The eruption is showing no signs of slowing down,” he wrote in the video’s description.

The Bardarbunga (Bárðarbunga) volcano is part of the second-tallest mountain in Iceland and located in the country’s Holuhraun lava fields - a volcanic system that spans some 200 kilometers by 25 kilometers.

This very interesting article, with lots of photos to along with the video clip, appeared on the Russia Today website at 8:48 p.m. Moscow time on their Thursday evening, which was 12:48 p.m. in New York.  It's courtesy of reader M.A.

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One simple reason why global stock markets are reeling

It is no mystery why global liquidity is evaporating. Central banks have turned off the tap. They have reduced net stimulus by roughly $125 billion a month since the end of last year, or $1.5 trillion annualized.

That is a shock for the financial system. The ratchet effect has been incremental, but relentless. We are finally seeing the consequences, with the usual monetary policy lag.

The Fed and People‘s Bank of China (PBOC) have stopped their two variants of global QE altogether (for now). Others have chopped their purchases of bonds by half or more. The Brazilians are net sellers, and in a sense they carrying out reverse QE. The Russians have just joined them again.

Fed tapering has taken out $85bn a month. The markets are having to go it alone as of this month, without their drip feed. Less understood is the effect of global reserve accumulation by the BRICS, emerging Asia, and the Petro-states. This has collapsed.

Here's Ambrose Evans-Pritchard, on behalf of his handlers, wringing his hands that the money printing is coming to a halt.  At the end, he echoes Jim Rickards when he states "...until the blinking starts at the Fed and the People‘s Bank. QE4 is creeping onto the table already."  It's the second offering of the day from Roy Stephens.

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Mark Carney launches investigation after real-time payment system crash delays house purchases

Mark Carney has launched an investigation into how one of the central pillars of the UK’s payments infrastructure collapsed for 10 hours, delaying hundreds of billions worth of deals.

The Bank of England Governor pledged to discover what had gone wrong and whether officials had responded properly after the enforced closure of the £277bn-a-day CHAPS payment system, which affected thousands of house purchases and major interbank money transfers.

The Bank said it would be carrying out “a thorough, independent review of the causes of today’s disruption”. “The review will cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans. Its findings will be presented to Court which will then publish the full report and the response,” it added.

MPs had earlier in the day called on the Bank to explain the fault, attributed to a “technical issue related to some routine maintenance”.

This news item put in an appearance on the telegraph.co.uk Internet site at 9:30 p.m. BST on their Monday evening---and I thank West Virginia reader Elliot Simon for sending it our way.

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ECB Unleashes (Covered) Bond Buying Program, Sovereigns Sell O

Draghi, we have a problem. Just as Coeure 'promised' the ECB, according to he FT, began its bond-buying program this morning. However, peripheral sovereign bond-buying front-runners banking on the ECB greater fool to offload to are disappointed as they are go no easy money love. The initial program is covered-bond-buying (similar to U.S. MBS, but a considerably smaller market) and the ECB will reveal how much it has bought each Monday afternoon (starting next week). Greek bonds are suffering the most with 5Y yields at cycle highs once again and prices at lows (vanquishing all of Friday's gains).

As the Financial Times reports:

The European Central Bank has started to buy covered bonds, launching its latest attempt to stave off a vicious bout of economic stagnation in the eurozone.

The purchases are the first in a bond-buying programme that is expected to see the ECB place billions of euros of covered bonds and asset-backed securities on its balance sheet over the next two years in an attempt to revive lending and growth across the region.

The ECB confirmed that the central bank had begun purchasing the assets on Monday. The purchases of asset-backed securities are expected to start later this year.

The central bank will reveal how much it has bought every Monday afternoon, starting next week.

This story appeared on the Zero Hedge website at 8:40 a.m. EDT on Monday morning---and it's worth reading.  It's the second contribution of the day from reader U.M.

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Credibility meets compromise in Europe's bank stress test

When Europe announced its latest health check of top banks early last year it promised a "comprehensive assessment" of how well prepared they were to withstand another financial crisis.

In practice, a spirit of comprehensive compromise has been just as important. 

A series of Reuters interviews with officials, bankers and others involved in the European Central Bank's financial inspection of the euro zone's biggest banks shows that in the seven months since it began, the ECB has had to shoot down countless pleas from banks and national supervisors for special treatment.

At the same time, according to sources who spoke on condition of anonymity, supervisors have revised the way they value assets and banks have failed to provide all the data demanded - multiple compromises that could cumulatively threaten the tests' reputation as tough and consistent.

This Reuters article, filed from London, was posted on their website at 7:12 a.m. EDT yesterday---and I thank Harry Grant for sharing it with us.

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The Reckoning For Swiss Banks is Far From Over

IN 2008 Bradley Birkenfeld, an American working for UBS, blew the whistle on the giant Swiss bank's offshore operations, which had helped thousands of rich Americans to dodge their taxes.

Among the lurid details that he revealed was the use of encrypted laptops, the smuggling of diamonds in toothpaste tubes for clients, and evidence of bankers travelling to America on tourist visas to avoid arousing suspicion.

UBS was sent reeling by the revelations. In recompense, in 2009 it paid a $780m fine to the American government and turned over data to the authorities on more than 4,000 clients.

The biggest fish to be caught in the net is now about to have his day in court. On October 14th jury selection started in a federal court in Florida for the trial of Raoul Weil, who as head of UBS's global private-banking business was responsible for the division that had fallen foul of the authorities. In 2009 America issued an international arrest warrant for Mr Weil. He was nabbed last year at an Italian hotel, while on holiday with his wife, and was extradited to the United States, where he has been under house arrest.

This news story showed up on the businessinsider.com Internet site at 4:40 p.m. EDT on Sunday afternoon---and it's the second article in a row from Harry Grant.

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Deadly Ukraine Crash: German Intelligence Claims Pro-Russian Separatists Downed MH17

After completing a detailed analysis, Germany's foreign intelligence service, the Bundesnachrichtendienst (BND), has concluded that pro-Russian rebels were responsible for the crash of Malaysian Airlines Flight MH17 on July 19 in eastern Ukraine while on route from Amsterdam to Kuala Lumpur.

In an Oct. 8 presentation given to members of the parliamentary control committee, the Bundestag body responsible for monitoring the work of German intelligence, BND President Gerhard Schindler provided ample evidence to back up his case, including satellite images and diverse photo evidence. The BND has intelligence indicating that pro-Russian separatists captured a BUK air defense missile system at a Ukrainian military base and fired a missile on July 17 that exploded in direct proximity to the Malaysian aircraft, which had been carrying 298 people.

Evidence obtained shortly after the accident suggested the aircraft had been shot down by pro-Russian militants. Both the governments of Russia and Ukraine had mutually accused each other of responsibility for the crash. After a Dutch investigative commission reviewed the flight recorder, it avoided placing any blame for the crash. Some 189 residents of the Netherlands perished in the downing of Flight MH17.

The news item appeared on the German website spiegel.de at 8:08 a.m. Europe time on their Sunday---and I thank Jim Skinner for finding it for us.  A companion story appeared on the RIA Novosti website on Sunday evening Moscow time.  It's headlined "German Intelligence Agency Chief Says Kiev Falsified Data on MH17 Crash" and it's courtesy of reader M.A.

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Oil prices won’t recover above $100 – Russian Finance Ministry

Decreasing oil prices are “inevitable” and the chance they will exceed $100 per barrel is “unlikely” the Russia’s Finance Ministry said. However, the Russian budget can withstand lower prices.

“The market is biased in favor of excess supplies. That is why price reduction is inevitable; it will have a structural character. We are unlikely to see prices higher than $100 per barrel in the near future,” Maksim Oreshkin, the head of the Russian Finance Ministry's strategic planning department told RBC TV in an interview.

“In general, the current downward price movement is structural. Investments in oil production have increased dramatically in the past ten years,” Oreshkin said.

Russian officials have stressed there will be no sharp rise in Russia’s budget deficit, but the country's largest bank, Sberbank, says an oil price of $104 is required to balance the 2015 budget. A drop of prices to $80 per barrel could cost Russia 2 percent of GDP.

The Russians have to look no further than the Comex to discover why oil prices are where they're at.  This Russia Today article showed up on their Internet site at 11:19 a.m. Moscow time on their Monday morning, which was 3:19 a.m. in New York.  I thank reader 'h c' for digging it up on our behalf.

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Egypt signs with six international firms to dredge new Suez Canal

Egypt signed contracts with six international firms on Saturday to carry out dredging of the new Suez Canal, the flagship project in President Abdel Fattah al-Sisi's program to revive an economy battered by years of political turmoil.

The companies are National Marine Dredging Company of the United Arab Emirates; Royal Boskalis Westminster and Van Oord, both based in the Netherlands; Jan de Nul Group and Deme Group, both of Belgium; and U.S.-based Great Lakes Dredge and Dock Company.

Lieutenant General Mohab Memish, head of the Suez Canal Authority, announced the consortium at a news conference in Cairo alongside Prime Minister Ibrahim Mehleb.

Egypt hopes the new canal will more than double revenues from the waterway by 2023 to $13.5 billion from $5 billion. It also plans to develop 76,000 sq km (29,000 sq miles) in the area into an international industrial and logistics hub to attract more ships and generate income.

This Reuters news story, filed from Cairo, showed up on their Internet site at 2:30 p.m. EDT on Saturday afternoon---and I thank South African reader B.V. for bringing it to our attention.

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U.S. airdrops supplies to Kurds battling IS militants in Kobane

U.S. military aircraft dropped weapons, ammunition and medical supplies late on Sunday to Kurdish forces battling the Islamic State (IS) group, also known as ISIS or ISIL, in the Syrian border city of Kobane.

U.S. Central Command said C-130 cargo aircraft had made "multiple" drops of supplies provided by the authorities in Iraq’s autonomous region of Kurdistan that were "intended to enable continued resistance against ISIL's attempts to overtake Kobane".

Early on Monday, a spokesman for Kurdish forces in Kobane confirmed they had received a large quantity of weapons and ammunition.

The airdrops Sunday were the first of their kind and followed weeks of U.S. and coalition airstrikes in and near Kobane, which is located on Syria’s northern border with Turkey.

This news item put in an appearance on the france24.com Internet site yesterday sometime---and it's courtesy of Roy Stephens.

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The Iraqi Army Never Was

In a bloody ISIS attack on an Iraqi Army base just north of Fallujah on September 21, upwards of 500 government soldiers perished or disappeared, fleeing into the marshlands, the woods, or to the next base camp four miles away. Few were left behind alive, surrounded by militant fighters who by all accounts were supposed to be less equipped, less trained, and less organized than Iraq’s professional fighting force.

But the Iraqi security forces, into which American taxpayers poured some $25 billion over the course of a decade, had in the span of a summer, crumbled.

While pro-war critics blame the Iraqi military’s failures on the current administration for leaving the country too soon, American veterans and journalists who spoke with TAC say the army was corrupt, incompetent, and unmotivated from the beginning, and that top U.S. officials papered over this inconvenient fact for years in order to protect their commands and maintain public support for the U.S. intervention.

No surprises here.  This longish, but very interesting article appeared on theamericanconservative.com website back on Thursday, October 9---and is definitely worth the read if you have the time and/or the interest.  It's the second offering of the day from reader Dan Lazicki.

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Iran acts to comply with interim nuclear deal with powers: IAEA

Iran is taking further action to comply with an interim nuclear agreement with six world powers, a monthly U.N. atomic agency report showed, a finding the West may see as positive ahead of a November deadline for clinching a long-term deal.

The report by the International Atomic Energy Agency (IAEA), seen by Reuters, made clear that Iran is meeting its commitments under the temporary deal, as it and major powers seek to negotiate a final settlement of a decade-old nuclear dispute.

It said Iran had diluted more than 4,100 kg of uranium enriched to a fissile concentration of up to 2 percent down to the level of natural uranium. This was one of the additional steps Iran agreed to undertake when the six-month accord that took effect early this year was extended by four months in July.

Refined uranium can be used to fuel nuclear power plants, Iran's declared goal, but can also provide the fissile core of a nuclear bomb if processed to a much higher degree, which Western states fear may be the country's ultimate aim.

This Reuters article, filed from Vienna, appeared on their Internet site at 1:36 p.m. EDT on Monday---and it's another contribution from reader U.M.

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Saudi, Kuwait Seen Curbing Oil Output at ’Opportune Time’

Saudi Arabia and Kuwait halted production at a jointly run oil field late this week, a move that could help ease a supply glut that has pushed global prices down 25 percent.

The 300,000-barrel-a-day Khafji field, located in the neutral zone between the two countries, was being shut because of environmental concerns, a person familiar with Saudi Arabian oil policy said yesterday, who asked not to be identified because the information isn’t public.

The shutdown comes as Saudi Arabia and other OPEC members face increasing pressure to scale back production while supply expands from the U.S. and other countries and demand growth slows. Asia’s oil market has become particularly flooded as the U.S. imports fewer cargoes.

This oil-related Bloomberg news item was co-filed from San Francisco, Manama, Bahrain---and Houston.  It appeared on their Internet site at 7:20 p.m. Denver time last Friday evening---and it's the second article I borrowed from yesterday's edition of the King Report.

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China sets tougher restrictions on illegal mining, exporting of rare earths

China is stepping up efforts to restrict illegal mining and exporting of rare earths with a five-month campaign that ultimately aims mainly to avoid a further plunge in prices.

Launched earlier this month and until March 31, five official bodies will work together to investigate and punish illegal miners and smugglers of the highly coveted elements.

Provincial and city governments will supervise the effort, Investor Intel reports.

This is not the first time China attempts to streamline the rare earth industry by giving control to state-owned miners and setting production quotas on a small number of authorized companies.

This article appeared on the mining.com website on Monday---and it's another offering from reader M.A.

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All the world’s gold to be confiscated and buried in Switzerland by 2020 argues Jim Rickards

In what pretends to be a history looking back from the future ‘Currency Wars’ author and fund manager Jim Rickards argues that by 2020 all the gold of the G-20 nations will be confiscated and buried in a former nuclear bunker under a mountain in Switzerland to take it out of the global financial system.

This is the conclusion to the astonishing tour de force article that kicks off his new monthly newsletter ‘Rickards’ Strategic Intelligence’ for Agora Financial, publisher of highly successful financial newsletters like Chris Mayers’ ‘Capital & Crisis’. Has the normally sober and thoughtful Mr. Rickards lost his marbles?

I must confess to having my doubts on reading his first issue with one absurd conclusion leading to another and then to a totally unrealistic world gold confiscation scenario. How would that happen? The G-20 meetings struggle to agree on a final communique. How could they agree something like that?

Mr. Rickards doesn't stop there. In his world not only does money die and cease to exist but there is a sort of death of capitalism that Marx prescribed and Stalin tried to implement without notable success. There are no markets, bonds nor money by 2024 and equality rules.

WTF!  Whatever Jim is smoking, I don't want any of it.  And don't look to me for answers on this one, dear reader, as I'm just as much in shock as you are.  This amazing commentary appeared on the arabianmoney.com Internet site on Sunday evening---and it is certainly a must read.  I thank Dr. Dave Janda for sending it along.

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Taking Your Gold for “The Greater Good”

But returning to the subject of a crash in the paper-gold market, this suggests that the spin that allows the banks of the world to simply steal all deposits over €100,000 could easily be applied to a similar, ongoing banking scam in the paper-gold market.

Let’s say that, rather than wait for the Emperor’s new clothes to be seen to be an illusion, the banks of the world decide to preempt this embarrassment in a proactive manner. Let’s say that, with the support of their friends in the governments, an announcement is made to the public that a decision has been reached that will aid tremendously in saving the “essential” banks. And—here’s the best part—it would not impact the “little man” who has already had to bear so much abnegation as a result of the greed of the rich.

The announcement states that the banks have been given the go-ahead to simply cancel the paper-gold certificates that they have sold. This will enrich the banks by billions of dollars, and the only losers will be the greedy rich who have so much money to burn that they have purchased gold certificates.

Were the banks to do this, they would, instead of being vilified for selling assets that they did not possess, be praised for taking affirmative action for “The Greater Good.”

This commentary appeared on the internationalman.com Internet site on Monday.

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In Silver Doctors interview, GATA secretary discusses developments in market manipulation

Interviewed for about a half hour last week by Silver Doctors, your secretary/treasurer discussed recent developments in market manipulation, speculated that gold will be revalued overnight by major central banks as part of a general world currency revaluation, and cautioned that China's drive to obtain gold isn't intended to establish a free market in gold but to wrest control of the gold market from the United States.

The interview was conducted last Wednesday---and the audio interview, which runs for 32:17 minutes, appeared in a GATA release on Saturday.  It's worth your time.

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Mad about yellow: India's love affair with gold

We worship it, buy it for investment, wear it as jewellery, weave it into cloth and even eat it. India's love affair with gold crosses the boundaries of religion and also class — and reaches its zenith in the run-up to Diwali.

"We buy at least a small gold coin in our family every Dhanteras and get the house repainted after Dussehra to welcome Goddess Lakshmi home," says Kandivali resident Ravindra Dave.

Dave is not alone, of course. Most Hindu families work towards purchasing gold at this time. "The ritual is akin to inviting Lakshmi, the goddess of wealth and prosperity," explains Anant Joshi, a priest from Bhuleshwar. "While some prefer jewellery, most buy gold coins with Lakshmi embossed on the front and her symbol, the Shri Yantra, embossed on the other side. Some have both Lakshmi and Lord Ganesha, the remover of obstacles, embossed on the coins."

This gold-related news article, filed from Mumbai, showed up on the dnaindia.com Internet site at 9:09 a.m. IST on their Sunday morning.  It's another offering from reader U.M.

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Government to Re-Impose Gold Import Curbs to Check Trade Deficit

Barely months after gold import rules were eased, the government is looking to re-impose curbs as the country's insatiable appetite has led to a surge in the yellow metal coming into India, threatening to undermine the improvement in external balances.

The finance ministry's revenue department has flagged the issue and asked the Department of Economic Affairs and the Reserve Bank of India to review the May 21 relaxation in the import rules issued by the latter.

The so-called 80-20 rule was relaxed in May by the RBI at the behest of the finance ministry after jewellers, bullion dealers, authorised dealer banks, and trade bodies sought easier rules. Under the 80-20 scheme, nominated agencies were allowed to import gold on the condition that 20 percent of the import would be exported. The easing of rules meant more entities were allowed to import gold.

The trade deficit worsened to an 18-month high of $14 billion in September following a 450 percent rise in gold imports as importers rushed to take advantage of lower prices. "Gold imports have risen since the norms were relaxed....There is a concern," a finance ministry official said. "We have written to the DEA and the RBI."

This article, filed from New Delhi, put in an appearance on The Economic Times of India website at 4:02 a.m. India Standard Time on their Monday morning---and I found it posted on the gata.org Internet site.

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Reserve bank of India will not change gold import rules, says sources

Reserve bank of India will not change its gold import rules, sources with knowledge of the matter said, responding to a report that the world's second-largest consumer of the precious metal was keen to limit imports.

The central bank has already eased some import controls by allowing seven trading houses to import the metal, driving a sharp jump in overseas buying despite a record import duty of 10 percent.

A surge rise in gold imports widened the trade deficit to an 18-month high of $14.25 billion in September, creating concerns for the new government of Prime Minister Narendra Modi, an unidentified Finance Ministry official told the Economic Times newspaper.

The ministry also sent a letter to the central bank seeking a review of the May relaxations, according to the report. But two officials familiar with the central bank's policies told on Monday it was not considering any change.

This article, also from the Economic Times of India appeared on their website at 7:47 p.m. EST on their Monday evening---17 hours before the previous Times of India article posted above.  It's the final offering of the day from Manitoba reader U.M.---for which I thank her.

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Koos Jansen: The Chinese precious metals market is on fire

China's gold demand, as signified by off take from the Shanghai Gold Exchange, has reached "extraordinary" levels in recent days, while silver is growing shorter in supply as well, according to gold researcher and GATA consultant Koos Jansen.

Jansen's analysis is headlined "The Chinese Precious Metals Market is on Fire" and it was posted on the Singapore Internet site bullionstar.com at 11:07 p.m. local time on their Sunday evening.  It's worth reading---and it's another gold-related item I found in a GATA release yesterday.

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Oct 18, 2014

Mike Maloney: Massive Market Divergence in 3 Charts

In his latest video update, Mike Maloney shows one of the most concerning data points for today's stock markets: decreasing volume. This is happening even while markets are levitated by Federal Reserve stimulus and negative interest rates.

After showing the volume action of the DOW, Maloney adds his thoughts: "This is not a healthy market. This means that less and less of the real investors are in there, and more and more of this is black box trading. The problem with that is that when the markets change every black box is going to be selling at once, so what is being set up here is probably the biggest market crash in history."

This 4:19 minute video clip by Mike was posted on the hiddensecretsofmoney.com Internet site on Tuesday---and I've been just too busy to get to it.  It's definitely worth watching---and there's a transcript [with charts] as well.

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Doug Noland: The Downside of "Do Whatever it Takes"

Considering the global backdrop, I actually see a curious lack of extreme views (at least from the bear side). Instead, we’re at the stage of the cycle where even “bearish” pundits go out of their way to distance themselves from “the world is ending” prognosis. I guess I would be considered an extremist, though I don’t see the world ending anytime soon. But this week did offer further evidence that history’s greatest financial Bubble is at significant risk.

Friday’s rally did a lot to paper over what was a disturbing week for global markets. The mini-melt-up successfully took a great deal of value out of index and stock put options that expired Friday. Those wanting market protection will now have to pay up for expensive puts that expire in November, December or later.

But don’t let the S&P 500’s modest 1.0% decline fool you. It was an extraordinary week. Japan’s Nikkei index was hammered for 5.0%, increasing 2014 losses to 10.8%. Japanese two-year yields traded to a record low 0.005%. After beginning the week at 6.60%, Greek 10-year bond yields traded to 9% on Thursday (before closing the week at 8.07%). Wild instability returned to European debt (and equities) markets. Portugal’s 10-year yields were up 75 basis points by Thursday, before a rally cut the week’s increase to 35 bps. Germany’s DAX equities index dropped 2.87% on Wednesday then rallied 3.12% on Friday. Italian stocks sank 4.44% and then rallied 3.42%.

If only Bubbles lasted forever. And, unfortunately, the longer they persist and the bigger they inflate, the more problematic the unavoidable collapse. This important reality is ignored at everyone’s peril. Determination to avoid collapse only ensures greater and more precarious Bubble distortions and maladjustment. “World Braces as Deflation Tremors Hit Eurozone Bond Markets,” read another U.K. Telegraph headline. And Bullard and the global central bank community fret a “collapse in inflation expectations.” It is important to recognize that disinflation and collapsing “inflation expectations” are symptomatic of a bursting global financial Bubble. They provide early evidence of what will be a spectacular failure in experimental “activist” central banking.

Doug doesn't miss a thing in this week's edition of his Credit Bubble Bulletin, posted at the prudentbear.com Internet site yesterday evening.  It certainly falls into the absolute must read category.

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Jim Rickards on Fox Business News

The first part of this interview runs for 3:33 minute---and is linked here.  The second part of the video interview runs for 1:24 minutes---and it's linked here.  You've heard some of this before, but some of it has been modified---and there's new material as well.  I thank reader Harold Jacobsen for sending it our way.

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Friday Humor: Forget QE4, Presenting QE5

Forget helicopters---here's the future of central-planning.

Don't leave The Eccles Building without one.

I thank Joe Nordgaard for sending this Zero Hedge funny, which he sent our way in the wee hours of this morning.

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Sprott Money Weekly Wrap Up

Listen to Eric Sprott Share his Views on Ebola, the Economic Slump Around the World and the Disingenuousness in the Precious Metals Markets.

Jeff Rutherford interviews Eric for 15:17 minutes---and the audio commentary was posted on the sprottmoney.com Internet site yesterday.  It's a must listen, especially the first part where discusses the current Ebola situation.

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The CIA owns everyone of any significance in the major media.”

As a former member of the major media prior to its concentration in few hands by the Clinton regime, I have reported on many occasions that the Western media is a Ministry of Propaganda for Washington. In the article below one of the propagandists confesses. -Paul Craig Roberts

Published on Russia Insider News

“The CIA owns everyone of any significance in the major media.” — former CIA Director William Colby

Our Exclusive Interview with German Editor Turned CIA Whistleblower

Fascinating details emerge. Leading U.S.-funded think-tanks and German secret service are accessories. Attempted suppression by legal threats. Blackout in German media.

Repenting for collaborating with various agencies and organisations to manipulate the news, Ulkotte laments, “I’m ashamed I was part of it. Unfortunately I cannot reverse this.

This absolute must read commentary showed up on the Paul Craig Roberts website on Thursday sometime---and my thanks go out to Roy Stephens for his first contribution of the day.

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James Perloff: A Century of Mainstream Media Lies

Newspapers were the first vehicle that mainstream media (MSM) used to manipulate Americans into war. The Spanish-American War (1898) was fought over Cuba, which had been a colony of Spain since 1511. By the 19th century, Cuba had become the world’s wealthiest colony and largest sugar producer, and its assets were coveted by the Illuminist cabal, which also wanted Spain neutered as a world power. National City Bank, then America’s preeminent bank, controlled the McKinley White House, loaned the government $200 million to fight the war, and took control of Cuba’s sugar industry afterwards (see Ferdinand Lundberg’s classic 1937 book, America’s Sixty Families).

To get young men to fight and die in Cuba for the banksters, it was necessary to persuade Americans – for the first time – that the U.S. military’s duty was not only self-defense, but “righting wrongs” overseas. It was before and during this war that the media honed a skill that would prove perennially useful: manufacturing fake atrocity stories.

The “Yellow Press,” as it was then appropriately called, was spearheaded by William Randolph Hearst’s New York Journal and Joseph Pulitzer’s New York World. Together they fabricated outlandish atrocity tales about Cuba, such as Spaniards roasting Catholic priests. On October 6, 1896, Hearst’s Journal carried this headline: “CUBANS FED TO SHARKS. Cries Heard at Night – They are Taken Outside the Harbor, and the Silent Ferryman Comes Back Alone.” Pulitzer’s World raved: “RAIDED A HOSPITAL– More than Forty Sick and Wounded Cubans Butchered.” But no hospital even existed in the region the World described.

Hearst’s reporters rarely ventured outside Havana’s bars. Some never even traveled beyond Florida, where they forwarded tales spun by Cuban émigrés. And some stories Hearst invented himself in New York.

I've read James Perloff's classic tome "The Shadows of Power: The Council on Foreign Relations and the American Decline."  It's right up there with G. Edward Griffin's "The Creature From Jekyll Island: A Second Look at the Federal Reserve"---and if you haven't read these two books, it's not too late to correct that oversight.  And, like the Paul Craig Roberts piece posted above, this falls into the absolute must read category as well.  I thank South African reader B.V. for sending it our way last Sunday, but for content reasons, it had to wait for today.

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Kudos to Herr Weidmann For Uttering Three Truths in One Speech

Once in a blue moon officials commit truth in public, but the intrepid leader of Germany’s central bank has delivered a speech which let’s loose of three of them in a single go. Speaking at a conference in Riga, Latvia, Jens Weidmann put the kibosh on QE, low-flation and central bank interference in pricing of risky assets.

These days the Keynesian chorus in favor of policy activism is so boisterous that a succinct statement to the contrary rarely gets through—-especially at Rupert Murdoch’s Wall Street yarn factory. But here’s what penetrated even Brian Blackstone’s filters:

The biggest bottleneck for growth in the euro area is not monetary policy, nor is it the lack of fiscal stimulus: it is the structural barriers that impede competition, innovation and productivity,” he said.

This commentary appeared on David Stockman's website on Wednesday---and I thank Mark Hancock for sharing it with us.

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Handelsblatt: "Four German Banks on the Brink"

Several days ago we were confused why, out of the blue, a €1 billion loan BWIC appeared that was dumping German non-performing loans. After all, the whole point of the European "recovery" fable to date has been to deflect all the attention from the "pristine" German banks, up to an including world-record derivatives juggernaut Deutsche Bank,  and to focus on Greece and other insolvent peripheral European nation. Earlier today, German Handelsblatt provided an answer, when it reported that "four German banks are on the brink", i.e., four banks of which three are known, HSH Nordbank, IKB and MunchenerHyp, will likely fail the ECB's stress test whose results are due to be announced next Friday.

Keep in mind that this is a significant fraction of the 24 German banks that are undergoing the ECB's Stress farce test. So one wonders: if one in six German banks is so unsafe even the ECB (which kept Cypriot banks going well past their insolvency) will give them a black stamp (because in Europe failing a bank stress test is first of all impossible since both Bankia and Dexia passed theirs with flying colours, but more importantly a death sentence), what does that leave for the rest of Europe's banks, all of which are in far more dire shape than sleepy Germany?

This very interesting news item appeared on the Zero Hedge website at 11:05 a.m. EDT on Thursday morning---and it's the first offering of the day from Manitoba reader U.M.

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The Reckoning: Helmut Kohl Tapes Reveal a Man Full of Anger

Schwan recorded more than 600 hours of interviews with Kohl in a total of 105 conversations between March 12, 2001 and October 27, 2002. Even during his tenure in office, Kohl had ruminated over his place in history. He sees himself on a level with former German Chancellors Otto von Bismarck, Konrad Adenauer and Willy Brandt. He is probably justified in doing so.

In the Schwan conversations, Kohl's objective was to document his own view of the Kohl era -- they are an extremely valuable treasure for historians. And the tapes served as the basis for Kohl's three-volume memoirs, which were ghost-written by Schwan. The relationship between the two, however, has soured of late, with Kohl having sued Schwan for possession of the tapes, a spat which is likely to worsen with the release this week of Schwan's book about the interviews.

The interviews contain, at least in part, Kohl's "historic legacy," according to the December 2013 ruling of a Cologne court on the ownership of the tapes. And they add new facets to Kohl's image. They reveal him to be a man who views both his rivals and the world at large through the lens of a calculating machtpolitiker (power politician).

This long 4-part exposé appeared on the German website spiegel.de late Tuesday afternoon Europe time---and for content and length reasons, had to wait for today's column.  It is, of course, courtesy of Roy Stephens.

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Europe will reconcile with Russia, and soon. It can’t afford not to

After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a surprising rapprochement. The eurozone economy is suffering badly and sanctions against Russia are partly to blame. Winter is also upon us, and that reminds every-one Vladimir Putin still holds the cards when it comes to supplying gas.

The clincher, though, is that Ukraine is heading towards financial meltdown. Unless an extremely large bailout is delivered soon, there will be a default, sending shock waves through the global economy. That’s a risk nobody wants to take — least of all Washington, London or Berlin.

Sanctions against Russia were always going to hit western Europe hard. The eurozone did 12 times as much trade with Russia as the United States did last year — that’s one reason Washington’s attitude towards corralling Russia’s economy has been somewhat more gung-ho.

This article appeared on the spectator.co.uk Internet site on Friday---and it's another contribution from reader B.V.

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Putin says gas deal with Ukraine for winter months only, Poroshenko says no deal at all

Kiev and Moscow have failed to resolve their gas supplies dispute, Ukrainian President Petro Poroshenko said after meeting Russia’s leader. According to Putin, only an agreement for winter supplies has been reached, but details are still to be worked out.

“We agreed on the basic parameters of the gas contract,” Poroshenko told reporters in Milan where leaders from Europe and Asia gathered for the ASEM Summit. According to the Ukrainian president, the Ukrainian side is looking for sources of funding to pay off the arrears.

The optimistic statement came after Poroshenko met with Russian Energy Minister Aleksandr Novak and the head of Gazprom Aleksey Miller.

But emerging from a meeting Russia’s President Vladimir Putin later in the day, the Ukrainian leader said that no agreement had been reached. New talks have been scheduled for October 21; the E.U. is once again set to mediate the process.

This story showed up on the Russia Today website at 1:19 p.m. Moscow time on their Friday afternoon, which was 5:19 a.m. in New York.  It's the second offering of the day from Roy Stephens.

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Putin: Ukraine's new Donbass law 'not perfect, but a step in right direction'

The new law giving special status to troubled regions in eastern Ukraine is 'not perfect,' but might be used to finally stabilize the situation in the area, Russian President Vladimir Putin said after a meeting with his Ukrainian counterpart in Milan.

"Perhaps it's not a perfect document, but it's a step in the right direction, and we hope it will be used in complete resolution of security problems," Putin said after closed-door talks with Ukrainian President Petro Poroshenko on Friday.

The two presidents met in Milan privately on the sidelines of the Asia-Europe Meeting (ASEM), a summit of Asian and European leaders.

The document on special status for the Donetsk and Lugansk regions was signed by Poroshenko on Thursday.

This Russia Today news item was posted on their Internet site at 5:51 p.m. Moscow time yesterday afternoon---and it's another contribution from Roy Stephens.

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Putin says both sides in Ukraine’s conflict fail to implement Minsk accords

Russian President Vladimir Putin said that the warring sides in Ukraine are not implementing the Minsk accords to the full extent.

“The landmark for Ukraine’s settlement must be the Minsk agreements,” Putin told reporters after the Asia-Europe Meeting summit. “Unfortunately, these agreements are not being implemented by the both sides, either by Novorossiya’s militias or by Ukraine’s representatives.”

The Russian president said that “the Minsk agreements are not being implemented to the full extent due to a number of reasons - objective and subjective.”

“I proceed from the fact that all the sides should work for putting these agreements into practice,” he said.

This news item, filed from Milan, appeared on the itar-tass.com Internet site at 10:15 p.m. Moscow time yesterday evening---and I thank Roy Stephens for sending it.

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U.S. dusted off old USSR-break-up strategy for use in Ukraine - former FSB chief

The current turmoil in Ukraine and the military conflicts in Georgia and the Caucasus are a direct result of the anti-Russian policy of the US administration, claims the former head of Russia’s Federal Security Service.

Nikolai Patrushev who headed the FSB from 1999 until 2008 said in an interview with the Russian government daily Rossiiskaya Gazeta that intelligence analysts established a current anti-Russian program being executed by American special services dates back to the 1970s, and is based on Zbigniew Brzezinski’s “strategy of weak spots”, the policy of turning the opponent’s potential problems into full scale crises.

The CIA decided that the most vulnerable spot in our country was its economy. After making a detailed model US specialists established that the Soviet economy suffered from excessive dependency from energy exports. Then, they developed a strategy to provoke the financial and economic insolvency of the Soviet state through both a sharp fall in budget income and significant hike in expenditures due to problems organized from outside,” Patrushev told reporters.

The result was the fall in oil prices together with the arms race, the war in Afghanistan, and anti-government movements in Poland, all of which eventually led to the breakup of the Soviet Union, said the former Russian security chief. He stressed that each of these factors bore hallmarks of US influence.

The Russians have long memories for those who transgress against them---and they certainly haven't forgotten what happened to them under Ronald Reagan back in the 1980s.  The piece I posted in yesterday's column headlined "How the Soviet Empire's Fall Was Engineered" is precisely what he's talking about in this Russia Today story.  It was posted on their website at 1:06 p.m. Moscow time on their Thursday afternoon---and this article is courtesy of reader B.V.

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Russian Foreign Minister Lavrov speaks to the World — Paul Craig Roberts

Dear Readers, I now have for you the complete English transcript of Russian Foreign Minister Sergey Lavrov’s speech to the United Nations. Lavrov’s speech, together with President Putin’s remarks in his Serbian press conference (excerpts posted on this site) clearly indicate that the moral leader of the world is Russia, not Washington.

The Russians have come out of tyranny as America descends into tyranny. Washington’s barbarity in the world is unprecedented. For 13 years Americans have permitted their government to bomb women, children and village elders in seven countries based entirely on lies and the selfish interests of the ruling elite. Washington has spewed depleted uranium everywhere, causing massive birth defects and health problems. We must remember that Washington is the only government that dropped nuclear weapons on helpless civilian populations. The victims were Japanese when the Japanese government was trying to surrender.

Putin’s warning to the White House Fool that humanity’s existence requires that Obama “remember what consequences discord between major nuclear powers could bring for strategic stability” is a pointed demand that the White House Fool halt Washington’s aggression toward Russia. We have had enough, Putin said. We are a patient people, but we are running out of patience with your idiocy.

This is long, but definitely worth reading if you have the time.  It was posted on Paul's Internet site yesterday---and once again it's Roy Stephens bringing this story to our attention.

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U.S. in controversial first talks with Syrian Kurdish party

U.S. officials have held direct talks for the first time with a Kurdish political party in Syria linked to Turkey’s PKK, seen by the U.S. and others as a terrorist organisation, the U.S. State Department said Thursday.

The talks with Syria’s Kurdish Democratic Union Party, known as the PYD, took place in Paris over the weekend and come as the U.S. seeks to build a wider coalition against the Islamic State group (IS).

“We have for some time had conversations through intermediaries with the PYD (Kurdish Democratic Union Party). We have engaged over the course of just last weekend with the PYD,” State Department spokeswoman Jen Psaki told a briefing.

The PYD has close ties to the PKK, a Turkish Kurdish party that waged a militant campaign for Kurdish rights and has threatened to abandon a peace process with Turkey in response to the current attack on the Syrian town of Kobane by IS militants.

This news story put in an appearance on the france24.com Internet site on Thursday sometime---and I thank Roy Stephens for another contribution to today's column.

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ISIS fighters withdraw from Syria's embattled Kobani - Russia Today sources

Islamic State fighters have been driven out of Kobani, the Kurdish town that straddles the Syrian-Turkish border, after weeks of heavy fighting, according to Kurdish sources speaking to RT.

A Kurdish commander said that ISIS retreated overnight – withdrawing by 2 km east and 9 km west.

The Kurds are now clearing the city. The Islamists have left behind suicide bombers hiding in the ruins of the various buildings in the city.

"We can still hear sporadic gunfire and explosions coming from Kobani," RT's Murad Gazdiev reports from the Turkish-Syrian border.

However, a victory announcement from the Kurdish fighters is yet to be made because the whole of the city has not been secured.

This news item showed up on the Russia Today Internet site at 12:15 p.m. Moscow time on their Friday afternoon, which was 4:15 a.m. EDT.  My thanks go out to Roy Stephens once again.

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The Chinese in Africa: Empire builders or new pioneers?

The influx of investment and people from China has become one of the defining narratives of Africa over the past two decades.

China, by all accounts, has identified Africa as the source of much-needed raw materials for its phenomenal growth, and Chinese business entrepreneurs see its sparsely populated interiors as a potential new frontier for manufactured goods.

This story of China in Africa has, however, largely been couched in government rhetoric and clouded by stereotypes.

Former New York Times Shanghai bureau chief Howard French attempts to lift the veil of secrecy that clouds many of the Chinese business dealings and give readers a glimpse of who the Chinese living and working in Africa really are.

This extremely interesting story is worth reading in my opinion.  It was posted on the South African website Mail & Guardian on Friday, October 10---and I thank South African reader B.V. for sending it our way last Saturday.

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China Flinches---and Injects $32 Billion Into Banks

The country's central bank will inject $32 billion into the country's banking system, according to The Wall Street Journal. The capital will go to 2o major and regional banks.

This is what the government refers to as "targeted easing," but many analysts say that these small jolts of stimulus will simply worsen China's mounting debt problems without solving the root of the issue.

"China’s debt problem lies with the corporate sector," wrote Societe Generale analyst Wei Yao in a recent note. "The cure should be capacity consolidation and debt restructuring, rather than another stimulus package targeted to boost investment demand."

This article showed up on the businessinsider.com website at 11:47 a.m. EDT on Friday morning---and it's the second-last contribution from Roy Stephens.

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China, Russia said to mull high-speed Moscow-Beijing rail line

China and Russia are considering building a high-speed rail line thousands of kilometres from Moscow to Beijing that would cut the journey time from six days on the celebrated Trans-Siberian to two, Chinese media reported Friday.

The project would cost more than $230 billion and be over 7,000 kilometres (4,350 miles) long, the Beijing Times reported -- more than three times the world's current longest high-speed line, from the Chinese capital to the southern city of Guangzhou.

The railway would be a powerful physical symbol of the ties that bind Moscow and Beijing, whose political relationship has roots dating from the Soviet era and who often vote together on the U.N. Security Council.

I had a companion story to this in yesterday's column headlined "China to put Russia on fast track to high-speed rail"---and that dealt with the new rail line from Moscow to Kazan, with a comment about the Beijing/Moscow system.  The above story is only about this huge project---and the Moscow/Kazan high-speed rail line is not even mentioned.

This AFP article appeared on the france24.com Internet site at 9:25 a.m. yesterday morning Europe time---and it's the final offering of the day from South African reader B.V., for which I thank him.

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North Korea in grip of leadership tension

North Korean leader Kim Jong-eun's extended absence from public view opened a flood gate of rumors. It went from a military coup to broken ankles, with gout, diabetes and obesity also mentioned. International concern with Kim's absence was justified, given the immense power this 31-year-old leader inherited from his father, Kim Jong-il, who passed away in December 2011.

An objective assessment of Kim's dismal performance during the past two-and-one-half years is compelling: North Korea has become a more isolated and despised nation. The missile launches, nuclear test, threats of a pre-emptive nuclear attack, the brutal execution of his uncle, Jang Song-thaek, and the routine vitriol coming out of Pyongyang all contributed to North Korea's pariah status.

Thus the initial hope that this young leader would move North Korea in a more positive direction gave way to despair, when North Korea assumed a more strident and belligerent attitude; an attitude that alienated its leadership from all countries, including China. It would not have been unreasonable to assess that this period of failed leadership was the catalyst for a military coup by those seniors in North Korea who wanted to reverse this negative trajectory; who wanted North Korea to engage economically with the international community and have United Nations sanctions lifted. Indeed, it could have been those in North Korea who wanted to re-establish North Korea's special relationship with a China that provides North Korea with the crude oil, aviation fuel and food aid necessary for the well-being of the country.

This commentary showed up on the Hong Kong website Asia Times site on Friday---and it's the final offering of the day from Roy Stephens, for which I thank him on your behalf.

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LBMA gets 8 proposals to replace century-old gold fixing

Intercontinental Exchange Inc., the London Metal Exchange, and CME Group Inc. and Thomson Reuters Corp. are among firms shortlisted to develop and run a replacement for the century-old London gold fixing benchmark.

Autilla Ltd. (Sapient) and EBS are also on the short list, the London Bullion Market Association said in a statement today. Ten companies submitted eight proposals, some of them joint.

The LBMA, which said last week firms will present at a seminar on Oct. 24, expects a market consensus to emerge next month and the chosen method adopted by year-end or early 2015.

The 'fix' will still be in no matter who runs it---and it certainly won't be any more transparent than it already is.  This Bloomberg story, filed from London, appeared on their website at 10:13 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.

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LBMA names Morgan Stanley as gold/silver market maker

The London Bullion Market Association (LBMA) said on Thursday it appointed Morgan Stanley as a market maker, underscoring the ambitions of some banks to expand into precious metals trading while others exit due to stringent regulations.

LBMA said it named Morgan Stanley & Co International Plc, a unit of U.S. investment bank Morgan Stanley, as a spot and options market-making member effective Thursday.

Currently, LBMA has 13 market makers which serve in either one, two or all three of the spot, options and forwards markets. They make markets by quoting two-way prices in both gold and silver products to other market makers.

Just three weeks ago, LBMA named Citigroup as a spot market-making member.

It's a very safe bet that Morgan Stanley and Citigroup are two of the big gold and silver shorts on the Comex---and handily fall into the 'Big 4' or 'Big 8' Commercial trader category.  They've always been there, but not as market makers.  I found this Reuters story, which was filed from New York yesterday, on the mineweb.com Internet site in the wee hours of this morning.

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LME takes battle to Washington after London warehouses win

Fresh from a court win in Britain, the London Metal Exchange now faces one of its biggest hurdles yet in its years-long crisis over its warehousing policy that consumers say has inflated prices: convincing U.S. lawmakers its reforms are enough.

When Britain's Court of Appeal handed a victory to the LME last week, knocking out a challenge to the reforms by Russian aluminum giant Rusal last week, the LME's head of business development, Matt Chamberlain, was in Washington, a source familiar with the matter said.

Chamberlain was there to plead the exchange's case with lawmakers who have been pushing for even greater change to the LME's warehouse policy.

Senator Sherrod Brown was among the people the LME visited, a spokeswoman for the Senator said. The Ohio Democrat has been a fierce critic of the LME, urging U.S. regulators to crack down on the 137-year old exchange, and threatening to write rules that would compel regulators to intensify oversight of the exchange on U.S. turf.

This Reuters news item, filed from New York, showed up on the mineweb.com Internet site on Friday sometime---and it's courtesy of Manitoba reader U.M.

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Riddle of inventory levels keeps platinum investors shy

Investors are unlikely to rush back into platinum any time soon after a minimal price reaction to its biggest-ever supply shock highlighted a major problem: no-one knows how much metal exists above ground or more importantly who holds it.

Analysts predicted a surging market as a record five-month labour stoppage in top producer South Africa wiped out more than one million ounces of output worth $1.28 billion.

Yet platinum, used mostly in automotive catalytic converters which clean up exhaust emissions, also failed to react to a 2.4 million ounce accumulation of metal into exchange-traded funds since 2010. The metal has lost seven percent this year and now sits close to 2009 levels around $1,200 an ounce.

Well, dear reader, I'd like to remind you of the two earlier stories in today's column about 'media lies and fabrications'---and I'd just like you to keep that it mind when you read this Reuters piece, filed from London yesterday---and posted on the mineweb.com Internet site.  It's the second offering in a row from reader U.M.

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“Save Our Swiss Gold ” - Game Changer For Gold?

We believe that the “Save Our Swiss Gold” campaign has the potential to be a game changer in the gold market - both in terms of the ramifications for the current global monetary system and in terms of higher gold prices. 

There has been a lack of coverage of this important story and there is therefore a lack of awareness about the possible implications for the gold market. Thus, in the weeks prior to the referendum on November 30th, we are going to analyse the referendum, the important context to the referendum and the ramifications of a yes or a no vote. - Mark O’Byrne, Head of Research, GoldCore

Here's another longish commentary on what the ramifications of a 'yes' vote in Switzerland will have on the gold market.  It's certainly worth reading if you have the time---and it was posted on the goldcore.com Internet site yesterday.  I thank reader M.A. for sending it along.

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Jim Rickards Interviewed for Anglo Far-East's Physical Gold Fund

This 40:15 minute interview conducted by John Ward appeared on the physicalgoldfund.com Internet site---and I thank Harold Jacobsen for sharing it with us.  But if you go through the list of topics being discussed, you'll see a lot of familiar themes, which I'm sure he's updated based on current events.

I haven't listened to it yet, but it will be on my "to do" list for today or tomorrow.

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China gold production seen falling, prompting more imports

Growth in gold mine output from number one producer China is set to slow significantly in coming years in the face of declining ore grades and waning profitability, analysts Business Monitor International said on Friday.

Lower mine production will pave the way for rising imports to meet persistent strength in demand from Chinese consumers, BMI analyst Xinying Chia said, while domestic mining companies will also look overseas to boost production.

In an interview with the Reuters Global Gold Forum, Hong Kong-based Chia said Chinese mine output growth was expected to slide to 0.9 percent in 2018, from around 6 percent this year.

"Many domestic miners are grappling with the problems of depleting reserves, falling ore grades and rising cash costs," Chia said.

This Reuters article, filed from London, appeared on their Internet site at 8:28 a.m. EDT on Friday---and it's another article I found posted on the gata.org Internet site.

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The sky is falling! Should you buy gold and silver?

Fear is stalking the global stock markets. Stock indices have been falling back sharply seeing a move to what might be seemed safer assets like bonds and gold. The falls have been precipitated by some poor economic data suggesting that most major economies are not out of the recessionary mire yet and, in the U.S. in particular, the realisation that the Fed is getting down to near eliminating its latest Quantitative Easing programme in total, although there may be some succour in that it tends to be putting back the day that it may allow interest rates to rise. And what happens in the U.S. markets tends to have a strong follow-through impact on markets in other parts of the world. 

A number of pundits have been predicting a stock market crash for some time now. The investing public though, just as it has in the past ahead of previous stock price crashes, has ignored this, seeing the market as an ever-increasing money-making mechanism. Thus the world’s major stock indices have been on a tear moving higher and higher without there being anything serious in the way of increasing corporate profits to support this. Suddenly it could all come crashing down – that’s what has happened in the past. While the Dow, S&P, TSX, FTSE, DAX etc. are not yet in free fall they are beginning to look like they could be heading that way.

So, should one buy gold as the safe haven it has proven to be in the past. Inflation – which is generally assumed to be gold-positive – just has not happened despite the vast amounts of liquidity the U.S. Fed and other central banks have pumped into the markets. Indeed much of the talk now is about the increasing possibility of deflation. What most don’t realise is that gold performs just as well, if not better, in a deflationary environment vis-a-vis the stock markets than it does in an inflationary scenario.

This commentary by Lawrence Williams showed up on the mineweb.com Internet site on Friday---and my thanks go out to Manitoba reader U.M. for her final offering in today's column.

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